Question

Amount due from Krish (Debtor) Rs.50,000 and received a cheque from him in full and final settlement of his account after discount of 2%. Identify the correct entry from the following: * 2 points​

Answer 1

Explanation:

bank a/c dr. 49000

discount allowed a/c dr 1000

To manan. 50000

Answer 2

Bank Account Dr.           49,000

Discount Allowed Account Dr.   1,000

To Krish Account                 50,000  

(Being 2% discount allowed against full and final settlement cheque)

The amount that was due from Krish (Debtor) was Rs.50,000 and he gave a cheque in full and final settlement of his account after a discount of 2%.  

2% of Rs. 50,000 = 1,000

So Krish agreed to make payment of Rs. 49,000 against settlement of Rs.50,000 due from him.

Therefore discount allowed to Krish against cheque payment is Rs. 1,000

For Cheque received, the bank account will be debited with the payment received amount which is 49,000

Discount allowed account will be debited with an amount of Rs.1,000 (2% of 50,000)

Krish Account will be credited with the full amount of Rs.50,000 to make the balance due from him Zero